The bank works against the clock to knock down the tax on the sector alleging unconstitutionality

The Spanish banks are preparing their arguments against the clock to try to overthrow in court the temporary tax on the sector designed by the Government. Entities subject to the tax must make the first payment before February 20. And, as explained by the financial sources consulted, as soon as it is settled, the banks will present a claim before the courts alleging unconstitutionality, double taxation and incompatibility with the own regulations to which they are subject.

Following the Executive’s decision to impose a temporary rate on banks, the entire sector raised its voice at what it considers an unfair and poorly designed tax. The law that regulates the tax provides that the entities that in 2019 obtained more than 800 million between interest margin and net commissions they must pay 4.8% between both concepts in 2022 and 2023. The Government justified this measure by considering that the banks will obtain extraordinary profits in these two years due to the accelerated rise in interest rates. But the entities have already set their legal machinery in motion to annul it.

It is a decision that should take the boards of directors first of each entity. The sector takes it for granted that all banks or the vast majority will resort to it. Even the CECA employers have hired a front-line office to study how to also present an appeal.

The sources consulted explain that the banks50% of the tax will be self-liquidated in the coming weeks and they will immediately go to court to appeal that liquidation. It is only the first step. In the short term, the entities will seek to get the amount they are going to pay back, because beyond the general disagreement, they are all going to pay it. But in the background, there is a long-term battle that, according to the sources consulted, can last between two and five years.

argumentative

The defenses of the entities are preparing an argument in which the path of unconstitutionality will be sought. The sector highlights the argument of the double taxation. In this sense, the banks will claim that they are going to be taxed twice: first, by the income obtained and later, those same income will be taxed by the benefits, through corporation tax.

Given that the norm prevents deductions from being applied, the banks are considering requesting unconstitutionality for violation of Article 31 of the Constitution, which ensures the principles of equality and progressivity of the tax system without having a confiscatory scope. “The annulment of the tax will be requested because it does not meet the requirements. The basis for arguing it will be unconstitutionality because there is double taxation”, explain financial sources.

On the other hand, they seek clarity. The Executive made sure to reflect in the law that regulates the tax the ban on banks passing it on to customers through an increase in the cost of credit. However, European regulations establish that when calculating prices, banks must take into account all their costs, including tax. Some entities have already publicly stated the incompatibility of both regulations and in certain cases they are also considering requesting unconstitutionality, considering that it represents a limit to the freedom of business and would violate article 38 of the Magna Carta.

Other financial sources consulted indicate that the defenses of the banks will collect the main arguments already pointed out by the Institute of Economic Studies (IEE) in a report on the impact of the tax. In this document, beyond the points already mentioned, legal experts consider that the rate violates the pgeneral principle of legal certainty of article 9 of the Constitution due to its retroactivity.

In this sense, he pointed out that the criteria for establishing the entities obliged to pay the tax is based on the results obtained in 2019, which means three years before the birth of the norm.

Reduction of the tax invoice

Income exclusion. The intention of the banks in appealing the lien is to annul it. But in a subsidiary way, the entities will request a reduction in the amount so that, in the event that the courts consider it legal, they allow income not linked to increases in interest rates, such as non-bank commissions, business linked to insurance or investment banking. The banks’ legal and tax departments have already gotten to work to discuss what is the real basis on which the new tax must be paid. According to the financial sources consulted, what is being studied is the breakdown of income that would enter the calculation and those that would be excluded.